Xinyi Glass Announces 2021 Interim Results
Net profit Up by 289.0% Net Profit Margin Reaches Up to 39.6%
Hitting Another Record High
Maintains High Payout Ratio
Interim Dividend at HK66.0 Cents Per Share
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Seizes enormous Market Opportunities
Sustains Strong Growth Momentum
(Hong Kong, 2 August 2021) - Xinyi Glass Holdings Limited ("Xinyi Glass" or "Group") (stock code: 00868), a leading integrated automobile glass, energy-saving architectural glass and high-quality float glass manufacturer, today announced its unaudited interim results for the year ended 30 June 2021.
During the period under review, the core business of Xinyi Glass performed well, with revenue, gross profit and net profit all reaching historical high, and net profit in particular stood out with a 289.0% leap with net profit margin reaching 39.6%. Revenue increased by 90.3% to HK$13,575.5 million (1H FY20: HK$7,134.0 million). Gross profit was HK$7,199.0 million (1H FY20: HK$2,441.7 million), representing a year-on-year jump of 194.8%. Gross profit margin soared by 18.8 ppts to 53.0% (1H FY20: 34.2%) when compared with the same period last year. Thanks to the persistently high average selling price of float glass and strong growth in sales volume of float glass, automobile glass and automobile glass, and with well deployed production capacity and high-quality products, the Group was able to fully capture the recovery momentum of the industry. Consequently, it recorded net profit of HK$5,377.0 million (1H FY20: HK$1,382.4 million), the highest half-year figure to date for the Group. Basic earnings per share were HK133.4 cents (1H FY20: HK34.4 cents).
The Group's financial position remained sound. As at June 30, 2020, it had cash on hand of HK$7,475.0 million (as of 31 December 2020: HK$5,304.1 million). The Group has maintained a high dividend payout ratio to reward shareholders for their support. The Board declared payment of an interim dividend of HK66.0 cents per share (1H FY20: HK17.0 cents), translating into a dividend payout ratio of 49.8%.
Dr. LEE Yin Yee, B.B.S., Chairman of Xinyi Glass, said, "The fact that the market has been trending up strong since the second half of last year is telling us that the glass industry in China has fully recovered from the short-term impact of the pandemic in the first half of last year. We are very pleased to see the Group's business performance maintaining strong growth momentum. The ability of Xinyi Glass to forge ahead amid challenges and fully capture the industry’s growth momentum is owed much to its shrewd market sense and forward-looking business strategy. We have been pushing for long to add value to the products in our portfolio and strategically expanding our production capacity. Such endeavors have seen the Group continuing to enhance its unique competitive advantages as the industry consolidates, giving it a solid foundation to seize market opportunities. The Group is moving on the best track in its development history. We are confident of its ability to sustain strong growth momentum and, at the brace of past achievements, take its business to new heights."
Float glass – Both selling prices and sales volume rose, strong demand expected to continue
During the period under review, with inventory low and downstream demand strong, both the sales volume and selling price of float glass climbed. As a result, the segment's revenue surged by 138.6% to HK$9,628.5 million against the same period last year, accounting for 70.9% of the Group’s total revenue. Gross profit of the segment amounted to HK$5,327.5 million, a 4.2 times increase relative to that of last year and gross profit margin again reached a record high of 55.3% (1H FY20: 24.9%). With the peak season to arrive in the second half year and no sign of supply increasing notably under current national policy, strong support is expected for the price performance of float glass. Hence, the Group is optimistic about the prospect of the business.
Automobile glass – Expect to perform satisfactorily as overseas demand picks up
During the period under review, the Group's automobile glass business progressed steadily. Revenue from the segment increased by 19.6% to HK$2,584.5 million year-on-year. Gross profit climbed 26.2% to HK$1,272.9 million and gross profit margin rose year-on-yearly from 46.7% to 49.3%. In terms of sales volume, Xinyi Glass accounted for more than 25% of the global automobile glass aftermarket, exporting automobile glass to more than 130 countries. With the epidemic prevention measures relaxing overseas, demand for automobile glass is recovering and the global automobile glass aftermarket has also resumed stable growth even with increase of international freight and related costs, which will benefit Xinyi Glass as it enjoys the advantage of economy of scales, and its performance of the automobile glass business has room to grow.
Architectural glass – Benefitting from national green policy, energy-saving laminated glass products is expected to become the trend
During the period under review, the Group’s architectural glass business performed well. The segment recorded revenue up by 45.4% year-on-year to HK$1,362.5 million. Gross profit increased by a significant 40.0% to HK$598.6 million, with gross profit margin at 43.9%. Driven by the improving demand from construction projects near completion and government’s promotion of using energy-saving construction materials, more construction projects opt for energy-saving, sound-proofing and high-value-added architectural glass, that agrees with the national green policy, pushing up demand for single insulating, double insulating (triple layers) and laminated insulating (triple layers) glass products, the price of those products is expected to rise alongside that of raw glass. As continuous support is expected for the segment, the Group is optimistic about it managing steady growth.
Geographic Market Analysis
During the period under review, the Greater China region remained the Group’s largest geographical market, with revenue growing more than 1.2 times to HK$10,544.2 million and accounting for 77.6% of the Group’s total revenue. As for overseas market, revenue from North America, Europe and other regions all grew satisfactorily, totaling HK$3,031.3 million. Overseas markets accounted for 22.4% of the Group’s total revenue.
Looking ahead, as the market expects that there will not be new capacity in the China float glass market in the short run while demand for glass to continue to be strong, the Group will continue to adapt to the latest market conditions with flexible business strategies, such as broadening high-value-added product lines like specialty glass, so as to further improve overall profitability, and reinforce and expand its leadership and advantages in the industry. Moreover, in the review period, added effort was made by the Group in exploring green financing. Since the beginning of 2021, the Group has secured a total of HK$5.3 billion of green loans from a number of banks. In the future, it will continue to actively pursue financial innovation. With ample capital as buttress, it will strive to open up various financing channels via green financing and elevate the scale of its green production to the next level.
Regarding production capacity, Xinyi Glass had adopted an aggressive expansion strategy, guiding it in expanding production capacity with discipline in regions with abundant resources and stable energy supply. The Group is also open to increasing production capacity via acquisitions, with the hope of strategically expanding production capacity to allow it to maintain market share and meet strong market demand. In addition, the automobile glass production line in Malaysia expect to commence operation by end of this year. It is expected to reduce the Group’s overseas import tariff burden and be able to match the long-term growth pace of related businesses.
Dr. LEE concluded, "With governments around the world stepping up their vaccination drive, it is believed that the global economy will gradually improve. In the advent of the second half year, all of us in the Group will continue to work as one in fortifying our business foundation, thereby bring long-term sustainable returns to shareholders. Furthermore, as a leading enterprise embracing its social responsibility, the Group will continue to uphold its ‘Leading a Green New Life’ development strategy. While actively driving business development, we will also work hard to give our industrial park a production setting friendlier to the environment, to the ultimate end of helping the nation achieve sooner her long-term ‘carbon neutrality’ goal."